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Prime Minister Abe makes a bold case for his government's economic policies, casting them in a positive light. Readers would expect no less. Japan has been the premier Asian political-economic actor since the Meiji Restoration until the recent past (2010, to be precise). Its rapid industrialisation, innovative technology, massive financial resources and low-profile diplomacy earned it a treasure-trove of soft power for most of the post-1945 period. Asia's future depends, and will continue to depend, to a considerable degree on what Japan elects to do. This is why Mr Abe's reforms, and their success, matter.

However, Mr Abe focuses exclusively on the economic aspects, clearly crucial, of his programme to change Japan. He neglects to mention that many non-Japanese readers will wish to know how he plans to modify or change Tokyo's national security policies and stances, which have been reassuringly stable since the USA handed over power to Japanese leaders all those years ago. This is significant for Japan's neighbours because Japan shows few indicators of having attained a collective consensus on its overseas conduct, especially in North-east Asia in the first half of the 20th century, and South-east Asia during the Second World War. Many societies in Japan's neighbourhood were violently brutalised by the Imperial Army's collective conduct and remain resentful of Tokyo's on-again-off-again acknowledgement of that experience. Leaders of some former-victim societies find this a vehicle for mobilising opinion at home, and "history" is even used as a tool for forging national cohesion and purpose. This is potentially dangerous as it allows entire societies to form adversarial opinions about Japan in the belief that Japan does not accept any responsibility for Tokyo's actions in the first decades of the past century. As Mr Abe has indicated, he will affirm past statements by his predecessors in August. Depending on how unequivocal his reiteration of those messages turns out to be , that will be a significant step towards reassuring anxious and resentful neighbours.

Some elucidation of his plans to modify and "normalise" Japan's martial stances and capabilities, too, should help reinforce the generally pacific trajectory of Japan's growth and development.

As Mr Abe notes, correctly, that the trust reposed by the world in Japan is Japan's biggest asset. As a student of Asia-Pacific security affairs (http://www.allbookstores.com/S-Mahmud-Ali/author ), I would suggest that Japan's locus and status place it in both an enviable and an unenviable position at the same time. It is simultaneously a component of several convergent- and competitive strategic triangles which frame the wider Asia-Pacific security architecture, one that is rather fluid given the power-dynamics shifting as we watch. The key triangles are: US-Japan-China, US-Japan-ROK, Japan-China-ROK, Japan-ROK-DPRK, Japan-US-Australia, US-Japan-India, Japan-ASEAN-US, Japan-ASEAN-India, Japan-China-ASEAN, and so on. These strategic triangles carry seeds of both tension and cooperation. Collaboration in economic, sci-tech, commercial, environmental, H&DR, epidemic-control and similar benign endeavours can build a prosperous and humane Asia. Adversarial and competitive dynamics make for a negative-sum and potentially catastrophic future. As regional leaders, Mr Abe and his putative future successors will always have a choice to make on selecting the direction of national effort. Asia-Pacific needs to be able to count on that aspect of Japan's leadership.

In 2014, the Japanese economy contracted largely due to a consumption tax hike to 8% and the Japanese yen marked a second sharp consecutive yearly depreciation against the US dollar.

The Japanese economy is now half the size of China's economy and roughly a fourth of the US economy in terms of the dollar, the international vehicle currency.

Going forward, by 2020, even at an annual growth rate of 2%, the Japanese economy would merely be a 1/3 of the size of the Chinese economy and a 1/5 of the US economy if we assume that China and the US will achieve 7% and 4% annual economic growth, respectively.

Unfortunately, Abenomics will bring forth long-term economic decline to Japan, and will have serious implications on Japan's international position, both economically and geopolitically.

The Japanese government, who has been stubbornly focusing on fiscal consolidation, can actually right now be borrowing at the interest rate below 0.3% from the JGB holders (mostly domestic investors) for 10 years.

Ironically, the government is missing opportunities to bring the economy into its sustainable growth path by taking advantage of the unprecedentedly low interest rates.

The Japanese economy, which has been suffering from the secular stagnation for the last two decades, and thus still faces a large output gap, needs to be boosted, not by consumption tax hikes, but by tax cuts including consumption tax reductions.

Raising taxes in an economy that is facing a large GDP gap, but enjoying the unprecedentedly low borrowing costs is simply wrong.

Furthermore, recent readings of inflation in Japan show that the Bank of Japan's 2% inflation target has been consistently missed by a notable margin.

With global oil prices dropping and concerns for global deflation growing, the second round of additional monetary easing conducted by BOJ Governor Kuroda at the end of October 2014 will soon become ineffective and it is highly likely that the central bank could loose its credibility substantially.

Japan’s solution does not lie in adding more liquidity under a zero interest rate regime, but rather lies in boosting aggregate demand, notably from Japanese households, through permanent and large consumption tax cuts.

US Keynesian economists like Laurence Summers argue that in a world that faces secular stagnation and zero policy interest rates such as the one that we live in today, activist fiscal policy is essential and Say's law is now reversed: demand creates its own supply.

Shinzo Abe calls the December 14 election "Japan's vote for bold reform". That his coalition won a two-thirds majority had the lack of a real political alternative to thank for. The opposition is in disarray. Many voters were bewildered by the snap election and the turnout was low.
Yet it was also a referendum on Abe's difficult and potentially unpopular economic reforms. Sofar "two arrows" of his Abenomics had been shot, without really hitting the targets. Japan has slided back into recession. His strategy was a snap election to secure himself a "powerful mandate of the Japanese people".
Now he is facing the real test of his "third arrow". In order to succeed, an ambitious package of structural reforms will have to be carried out to boost growth, improve "competitiveness" and unleash "dynamism". The government will have to liberalise the electricity and pharmaceutical industries, to restructure the agriculture, to reform the social security system, and to get more women into the workplace and into senior positions.
At the same time he has a bitter pill for the Japanese to swallow - the "increase in the consumption-tax rate", which aims to reduce Japan's public debt, which is around 220% of its GDP. With an ageing population and a shrinking workforce, Japan will need to adopt "labor regulations to the norms of modern life". Instead of opening its gate for immigrants to work in Japan, Abe encourages "more Japanese women to participate in the workforce". It will take years for this to happen, because the society has to get used to socio-economic changes.
According to Abe, "Japan’s economy needs powerful external catalysts" like the Trans-Pacific Partnership (TPP) and the Japan-European Union Economic Partnership Agreement to "enhance its labor productivity". But Japanese farmers dig in and rally against the TPP free trade deal, fearing their produces would become less competitive.
Then Abe highlights the "enormous amount of trust in the world about the path that postwar Japan has taken", when he travels abroad. He will be "working even harder to restore Japan’s economy" while "safeguarding its position in the global vanguard of peace, progress, and prosperity". Yet Japan has a tortured history implementing structural reform. Often the over-bureaucratic civil service is to blame for its paralysis. Only time can tell whether the country can shake off its torpor and return once again to the forefront of the global economy.

Amazing! Can you imagine our political leaders taking on "Some of the agro-business organizations – the epitome of vested interests – must change, and we will push them to do so."

However, taking on the vested interests will depend upon the details of the accounting. For example, in Japan decreasing the political rents of the agro-businesses will decrease the total sales from that sector, while benefiting everyone but agro-business organizations. If the present frozen system evolves into a modern competitive agricultural sector, the prices will decrease and the volume will stay almost the same (except increasing imports). The GDP will decrease and all the people will be better off.

National accounts depend upon money not what people actually consume, so the thriving of the population isn't the same as what the accounting says.

Shinzo Abe's informative and timely article on the 'third arrow' of Abenomics, structural reform, sets out the way forward in the drive for 'the competitiveness and long-pent-up dynamism of Japan's firms and people.' I'm looking forward to reading the details of tax reform and that in labour regulation, particularly to see how women will be encouraged into the workforce. Focus is to be placed on international trade agreements, as the EU is doing. In fact structural reform was one of the main measures agreed at the recent G20 and along with investment stimulus, forms vital global initiatives. 2015 was thought to be a good year for launching them and it is sad to see issues like Greece and oil intervening . Greece will very likely be handled satisfactorily, but oil is more problematic. Is there a floor in Brent Crude yet?

I wish the Prime Minister Abe better luck on achieving structural reform than President Hollande who is having a tough time legalizing Sunday hours for businesses and has no chance to end the 35-hour work week.

An Island Nation of 150 million has scaled such peaks that China and India have only dreamt of for 100 years. Another Island Nation on Eurasian west end scaled similar peaks 200 years ago and changed the world. It sustained its place at the pinnacle by breathing its DNA in The Anglosphere. Demand mountains were created by nucleating Megacities in The Anglosphere. Japan can nucleate similarly in an Asia that takes pride in Japan's peaks.New Bangkok, New Hanoi, New Yangon, New Ahmedabad, New Allahabad, New Patna, New Nagpur, New Indore, New Vizag. These New Megacities create the Demand mountains by local wealth generated - just as Calcutta, Bombay, Madras, Tokyo, Hongkong, Singapore were once nucleated by The West. China and it's AIIB. Japan & India together perhaps in a JIIB. The Anglosphere had its New Londons - Auckland, Brisbane, Chicago, Sydney, Seattle and Vancouver. New Asia can be The New Anglosphere. Japan needs to address its domestic structural reform most certainly. Often though the answer lies in a World that has not been tapped for transformation that it seeks within.